The criminal complaint filed against Mr. Madoff alleges that he told senior employees Wednesday that his business was "a giant Ponzi scheme," according to a person familiar with the matter. The alleged scheme involved tens of billions of dollars, but the extent of investor losses wasn't immediately clear.

The disclosure came after Mr. Madoff tried to distribute early bonuses to employees of his firm, prompting questions by senior employees, a person familiar with the situation said.

Mr. Madoff, 70 years old, allegedly told employees he had a couple of hundred million dollars left and wanted to distribute it before turning himself in to authorities, this person said.

Unless you work in equities trading, you may have never heard of Madoff. The firm is one of the largest market maker companies on Wall Street, buying and selling securities for brokerages. Earlier this year, it said it had around $600 million in firm capital. The Journal says the asset-management unit of Madoff Securities was involved in the scheme.

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